In a surprise announcement that could compromise a major trade deal, President Donald Trump announced on Thursday that he is imposing a 5 per cent tariff on all Mexican imports to pressure the country to do more to crackdown on the surge of Central American migrants trying to cross the border.
He said the percentage will gradually increase "until the Illegal Immigration problem is remedied."
Mr Trump made the announcement by tweet after telling reporters earlier on Thursday that he was planning "a major statement" that would be his "biggest" so far on the border.
"On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied," he wrote.
He added: "at which time the Tariffs will be removed."
Mr Trump has accused the Mexican government of failing to do enough to crack down on the surge of Central American migrants who have been flowing to the U.S in search of asylum from countries including El Salvador, Honduras and Guatemala.
Mexico's deputy foreign minister for North America, Jesus Seade, said it would be disastrous if Mr Trump goes through with his threat to impose new tariffs.
The announcement comes as the US administration has been pushing for passage of the United States-Mexico-Canada Agreement that would update the North American Free Trade Agreement.
During a visit to Canada on Thursday, Vice President Mike Pence vowed the deal would be passed this year.
"Our administration is working earnestly with leaders in the Congress of the United States to approve the USMCA this summer," he said.
Asked by reporters about the new tariff consideration, Pence said both Mexico and Congress need to do more and that Trump is determined to use his authority to call on them to do so.